The Spring Meeting is the largest gathering of competition, consumer protection, and data privacy professionals globally, with lawyers, academics, economists, enforcers, journalists, and students from around the world. During the Spring Meeting, Axinn associates attended thought leadership panels to capture key insights, including a panel titled "Merger Trials: Winning Strategies."
On this panel, accomplished merger litigators reflected on their recent wins and losses in some of the most famous (or infamous) cases in recent memory, such as Kroger/Albertsons, Tapestry/Capri, US Sugar/Imperial Sugar, Tempur Sealy/Mattress Firm, JetBlue/Spirit, Penguin Randomhouse/Simon & Schuster, and Microsoft/Activision Blizzard. They provided important insights for merging parties and antitrust litigators on fact and expert evidence, the failing firm defense, litigating the fix, and recent state merger enforcement.
To read all the articles in the series, click here.
Key Takeaways:
- Judges Emphasize Ordinary Course Evidence. Panelists agreed that, in evaluating market definition, judges put a lot more weight on ordinary course/qualitative evidence versus economic evidence offered by experts. The most persuasive evidence, according to panelists, is what companies tell their investors and what third parties are saying about the transaction; the hypothetical monopolist test and econometrics confirm the opinion judges come up with based on the qualitative evidence. Panelists agreed that they could not think of any case where the court overruled qualitative evidence of market realities in favor of econometrics.
- Fact Witnesses Make the Best Narrators. Panelists said there has been a shift away from experts and toward fact witnesses as the key storytellers in merger trials. This can include business executives of the merging parties as well as third parties. Panelists maintained that experts can effectively buttress fact witnesses by explaining the industry in a simple way.
- The Trouble with the Failing Firm Defense. The panelists also discussed the failing firm and weakened competitor defenses. Panelists agreed that the relevant standards for both are incredibly hard to meet and suggested that the bar should not be so high, as it would make practical sense for courts to consider what the parties will look like but-for a merger. Panelists also discussed that these defenses can put sellers in a difficult position: they require the putting on of evidence of a firm's impending failure in a public trial. If shareholders are watching and react negatively to such evidence, it could exacerbate the firm's problems if the deal does not proceed.
- How Best to Litigate the Fix. Because the agencies under the Biden administration accepted very few remedies to address their competitive concerns about a transaction, parties began to more frequently "litigate the fix." The panelists agreed that while it is the defendant's burden to demonstrate the efficacy of the proposed fix, they are not obligated to show that the fix will restore fully pre-merger competition. Rather, defendants must show that the fix will limit the lessening of competition. Panelists advised that, from a practical perspective, merging parties who are considering a litigate-the-fix strategy should look for remedies that work fast and that address the competitive issues in as permanent a way as possible. Parties might also consider coupling remedies to strengthen the overall effect. For example, in Temper Sealy the court found the combination of store divestitures and commitments to keep slots on the showroom floor open to competitors very persuasive.
- Separate State Attorney General Enforcement. In the Kroger/Albertsons deal, in addition to the FTC's complaint, two State Attorneys General filed their own complaints challenging the merger in different courts. State enforcers frequently join complaints filed by federal enforcers in merger challenges, but the filing of separate complaints is more unusual. Panelists agreed that this practice is inefficient and creates concerns that the government is getting three bites at the apple in the same case. Panelists also warned that parties adverse to a merger could try to take advantage of this development by pressing states in which they do business to sue separately from the federal agencies.
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